Cryptocurrency is quickly becoming an election issue, with Ethereum (ETH-USD) emerging as a significant beneficiary. From Monday to Tuesday, Ether surged 21%, marking its best two-day performance since January 2021.

This rally occurred despite initial concerns about the prospects for the next big crypto surge. The government’s hesitation to approve a suite of spot Ether ETFs had dampened enthusiasm. This hesitation contrasted with the excitement over Bitcoin ETFs, which had revitalized the crypto market late last year and sustained its momentum into this year.

The general expectation was that widely available crypto ETFs would facilitate crypto adoption among latecomers, allowing less crypto-savvy investors to allocate a “responsible” portion of their 401(k)s to these new ETFs. However, Jim Bianco of Bianco Research cast doubt on this theory, especially with the Securities and Exchange Commission showing no signs of approving spot Ether ETFs as a crucial deadline approached.

Then, according to Anthony Pompliano in the Pomp Letter, “the game changed.” On Monday, Bloomberg’s Eric Balchunas and James Seyffart increased their odds of spot Ether ETF approval to 75% from 25%, citing “chatter that the SEC could be doing a 180 on this increasingly political issue.”

This sudden shift in the SEC’s stance led to a surge in Ether prices. Matt Hogan, Chief Investment Officer at Bitwise Asset Management, highlighted this development on Yahoo Finance’s Market Domination. He noted a “real sea change in Washington around crypto,” with recent bipartisan crypto legislation and a growing coalition around stablecoins.

Hogan emphasized that “Washington has gotten the message that crypto is good for America and popular with American voters.” This change in sentiment was also reflected in former President Donald Trump’s recent pro-crypto stance.

Whether or not the SEC’s apparent change of heart is related, crypto enthusiasts are energized by the prospect of political support. Pompliano articulated this optimism, stating, “A bunch of people on the internet created a $2.6 trillion industry in the face of government pressure. Imagine what happens when the government is now actively courting these individuals and companies, along with embracing the technology. The headwind becomes a tailwind quickly.”

Spoken like a true crypto bull.

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A surge of enthusiasm permeates cryptocurrency markets as hopes for the approval of exchange-traded funds (ETFs) directly investing in Ether soar, signaling a notable shift in sentiment.

The positive outlook coincides with a flurry of developments involving potential ETF issuers, stock exchanges facilitating their trading, and the US Securities and Exchange Commission (SEC). Sources familiar with the matter revealed that the SEC requested updates to rule change filings from the New York Stock Exchange and Cboe Global Markets, indicating a potential uptick in the likelihood of approval. However, the outcome remains uncertain, underscoring the complexities involved.

Fidelity Investments recently amended its S-1 registration statement with the SEC for its proposed spot-Ether ETF, addressing key concerns such as staking and derivative investments. This move precedes a looming May 23 deadline for the SEC to review VanEck’s ETF application, adding to the anticipation.

Analysts view potential ETF approval as a significant regulatory milestone, with expectations of substantial inflows into Ether upon implementation, akin to the impact observed with Bitcoin ETFs. Geoff Kendrick of Standard Chartered estimates inflows ranging from $15 billion to $45 billion within the first year post-approval.

The Grayscale Ethereum Trust (ETHE) serves as another barometer of market sentiment, with its discount to underlying Ether holdings narrowing significantly, reminiscent of patterns observed before the approval of Grayscale’s Bitcoin Trust conversion.

Ether’s recent price surge, coupled with heightened probabilities of ETF approval, reflects growing optimism among investors. While the SEC refrains from commenting on specific filings, stakeholders eagerly await developments in this evolving landscape.

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Uniswap Labs, the innovator behind Ethereum’s leading decentralized trading platform, refuted the US Securities and Exchange Commission’s (SEC) allegations, contending that crypto tokens do not qualify as securities but are akin to file formats such as PDFs.

The New York-based startup rebuffed claims of operating an unregistered exchange and broker-dealer, following a Wells notice served by the SEC’s Enforcement Division last month, signaling potential legal action.

Marvin Ammori, Uniswap Labs’ Chief Legal Officer, emphasized during a Zoom press conference, “Tokens are simply a file format for value and are not inherently securities. The SEC must unilaterally redefine exchange, broker, and investment contracts to encompass our operations.”

In a detailed 40-page response to the SEC, Uniswap Labs asserted that pursuing legal action against them poses risks to the SEC’s authority over crypto tokens. The company expressed readiness to litigate, confident of prevailing.

SEC Chairman Gary Gensler’s stance that decentralized exchanges fall under regulatory oversight has been challenged by Uniswap Labs, which argued that UNI tokens, serving as Uniswap’s governance token, do not meet the Howey Test requirements for investment contracts.

Additionally, Uniswap Labs refuted the classification of LP tokens as securities, clarifying that these tokens function as accounting tools to monitor users’ provided assets and earned fees, rather than serving investment purposes.

Uniswap Labs’ response underscores the ongoing debate surrounding the regulatory status of digital assets and decentralized exchanges, highlighting the evolving landscape of crypto regulation.

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In a significant market move, the price of ether (ETH) surged more than 10% to $3.4K after Bloomberg analysts substantially increased the likelihood of the U.S. Securities and Exchange Commission (SEC) approving spot ETH exchange-traded funds (ETFs). Previously, markets had largely anticipated SEC rejections of proposed funds this week.

Eric Balchunas, Bloomberg’s Senior ETF Analyst, tweeted that he and colleague James Seyffart raised their odds of spot Ether ETF approval to 75%, up from a mere 25%. Balchunas noted a change in sentiment within the SEC, suggesting a potential shift in the regulatory stance on what he termed an “increasingly political issue.” The sudden alteration caught many by surprise, leading to a flurry of activity as investors reassessed their positions.

The SEC faces imminent deadlines for final decisions on spot ETF approvals or denials, following multiple delays in reaching determinations on these funds.

The surge in ETH prices also lifted Bitcoin (BTC), which gained over 5% and approached the $70,000 threshold. Additionally, the Grayscale Ethereum Trust (ETHE), a closed-end fund that Grayscale seeks to convert into a spot ETF, experienced notable movement. ETHE, which had been trading at a significant discount to its net asset value as investors speculated on SEC disapproval, surged more than 23% on Monday in response to the optimistic outlook for spot ETH ETF approval.

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After a decade-long tenure at Grayscale Investments, Michael Sonnenshein is stepping down as chief executive officer of the cryptocurrency asset manager. He will be succeeded by Peter Mintzberg, currently serving as the global head of strategy for asset and wealth management at Goldman Sachs Asset Management. Mintzberg is set to assume the role of CEO on August 15, according to a press release from Grayscale. During this time, Edward McGee, the Chief Financial Officer, will assume leadership of the company.

Sonnenshein, who joined Grayscale in 2014 and served as CEO for the past three years, decided to depart to pursue other interests, the company stated. The Wall Street Journal was the first to report this news.

During Sonnenshein’s tenure, Grayscale achieved a significant victory against the SEC, leading to the approval of the first spot-Bitcoin ETFs. The company had long sought to convert its Grayscale Bitcoin Trust (ticker GBTC) into an exchange-traded fund. However, since the conversion, GBTC has experienced substantial outflows, with investors gravitating towards newly launched, more cost-effective spot-bitcoin ETFs.

GBTC, once a primary avenue for investors to gain exposure to Bitcoin without directly purchasing the token, reached assets of nearly $44 billion in 2021. However, since the ETF conversion in January, GBTC has seen outflows exceeding $17.6 billion. In contrast, other US spot-bitcoin funds have attracted positive inflows this year, with BlackRock’s $15.6 billion leading the pack. GBTC’s 1.5% expense ratio has been cited as a deterrent for investors, compared to the lower fees charged by other funds.

Sonnenshein defended GBTC’s relatively high fee in a January interview with Bloomberg TV, citing the company’s size, liquidity, and track record. Despite Grayscale’s efforts to convert GBTC into an ETF, the SEC rejected the proposal in 2022, arguing that a Bitcoin-based ETF lacked sufficient oversight to detect fraud. Grayscale responded with a lawsuit against the SEC, alleging discrimination against its product while approving similar Bitcoin-futures ETFs.

The search for a new CEO began in late 2023, according to sources familiar with the matter cited by the Wall Street Journal. However, the decision was unrelated to GBTC’s performance or outflows.

The crypto asset class stands at a crucial turning point, making this the opportune time for a seamless transition, Sonnenshein expressed in a press release.

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